Why the UK makes no money from its inventions

Tony Blair’s think tank has published a paper calling for reform of the UK startup ecosystem and highlighting the stark difference between the research published by the UK and its relatively subdued entrepreneurial success.

A report published by the Tony Blair Institute for Global Change has highlighted the need for reform of Britain’s innovation landscape, noting that the current ecosystem ‘does not consistently give promising technologies the strongest foundations for success’.

The think tank argues that innovation and the commercialisation of cutting-edge technologies is the only plausible way to reindustrialise the UK.

Britain is home to four of the world’s ten best universities and has the world’s third-largest venture capital market, outputting an exceptional amount of high-quality research. However, this has not been matched by business R&D and financially successful spin-outs companies.

“The UK therefore combines exceptional research with a comparatively thin base of R&D-intensive businesses able to absorb, develop and scale new technologies,” the think tank said.

It has become all too familiar to hear of research produced in the UK being taken away to be monetised elsewhere. Machine learning company Deepmind was famously founded in London, but later was snapped up by Google and has been moving closer to the US and Google ever since.

The problem, the Tony Blair Institute believes, lies in Britain’s early-stage innovation ecosystem, and aprtly in the tension between academia and business.

University research is centred around an academic career, with progression tied to publications, grant funding, and teaching. This means that researchers are incentivised to publish their findings as opposed to monetising them, which can potentially release that IP into the wild and compromise the ability for it to be commercially applied within the UK.

“Researchers therefore need to recognise commercial opportunities early but are often not incentivised to do so,” the think tank said.

Despite having some of the best research output in the world, the UK ranks only 12th for international patent applications from academia, behind France, Germany, Japan, Denmark, and Ireland.

The think tank said the system in the UK is one where academic progressions is vaunted, while pursuing commercial applications careers a penalty for one’s academic career and divests one of their position in that culture.

“When movement into industry or entrepreneurship is seen as a departure from the conventional academic path, this can shape researchers’ perceptions of what constitutes a successful career,” the report said.

“Yet greater movement between the two can benefit both: scientific expertise flows into companies, while commercial experience, industry knowledge and networks can flow back into universities.”

To address this challenge, the Tony Blair Institute has proposed a number of reforms to the UK’s startup ecosystem. It argues that the government should build commercial capability through Venture Doctorates and Enterprise Fellowships and connect experienced entrepreneurs to the next generation of ventures.

Other reforms proposed by the think tank include standardising technology transfer from academia and aligning incentives with the long-term economic outcomes the UK requires, and building a connected pathway of state support that takes technology from proof-of-concept to consumer application.

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